UPDATE 1-Qingdao Port halts some metal delivery due to probe -sources
* Metal deliveries at Dagang Port suspended - sources
* Authorities target probe to be wrapped up within this month
* Iron ore deliveries at Qingdao Port unaffected by probe (Adds expected timeline of investigation, industry comments)
By Fayen Wong and Polly Yam
QINGDAO/HONG KONG, China, June 9 (Reuters) - China's Qingdao Port has sealed its Dagang bonded metal storage area and suspended delivery of metals from the section, as authorities investigate an alleged fraud into financing of copper, aluminium and alumina, two sources with direct knowledge of the matter said.
A Reuters reporter at the port on Saturday saw that the main gates into the Dagang bonded storage zone, an area roughly the size of two soccer pitches and which mainly holds aluminium ingots, were closed with a chain and padlock.
"The bonded zone has been sealed off and no metal deliveries are allowed," said a person at the port, speaking on condition of anonymity because the source was not authorized to speak to media.
A second person, whose firm has copper stocks in another bonded zone at the port, said authorities had ordered the sealing of the Dagang metals storage area.
The Qingdao Customs Authority is targeting for the investigation on the metal ownership issues within this month, said a senior executive at a firm which produces and trades aluminium.
The bonded storage area, located at the front of Qingdao Port's administrative building, was watched by two security guards during a visit by a Reuters reporter.
China's Qingdao Port International Co. Ltd. said on Friday that it was assisting in the investigations on fraud related to metal financing but neither the company nor its employees are implicated.
It said its Dagang branch was asked by the Public Security Authority, China's police and security administration, to help with an investigation relating to aluminium and copper products under the name of a third-party cargo shipment agency on behalf of a cargo owner.
Qingdao Port, the world's seventh-busiest port, is not a major copper trading centre like Shanghai. A spokesman for the port said he could not immediately comment on the sealing of the Dagang bonded zone.
The amount of metal involved in the financing probe was about 20,000 tonnes of copper, nearly 100,000 tonnes of aluminium ingots and about 200,000 tonnes of alumina, the raw material for aluminium production, said the second source.
Qingdao Port also has bonded zones for metals storage in other areas and deliveries to those sections had not been affected by the probe, said the source.
News of a investigation into a metal financing fraud at Qingdao Port, where a third-party company is suspected of using single cargoes of metal multiple times to obtain financing, has rattled banks and trading houses and unsettled markets.
Trading houses and banks have sent executives to the Qingdao port as well as other terminals to physically check on their exposure, while at least one bank has halted new metal financing to some clients in China.
However, trade sources said other ports in China are allowing free access and entry for stakeholders to their goods and audits so far suggest that the financing scam at Qingdao was an isolated case.
"As far as I'm aware, investigations to date have not revealed anything untoward at any other location," said a source at a warehousing company.
The probe has not affected iron ore shipments and deliveries at Qingdao Port, China's largest iron ore terminal.
"It is business as usual; the ships are still coming in and trucks are still sending iron ore out of the ports," said a port official, who declined to be identified.
(Additional reporting by Melanie Burton in SINGAPORE; Editing by Amran Abocar, Ed Davies and Louise Heavens)